The State Duma will consider a bill allowing the introduction of a self-ban on obtaining loans

This week the State Duma will consider in the first reading a bill allowing the introduction of a self-ban on obtaining loans. The idea has been discussed for more than a year, but complaints remain about the document. In particular, market participants and experts criticize provisions that overly detail the types and methods of concluding loan agreements, believing that citizens may become confused.

At the end of last week, the Duma’s financial committee issued an opinion on the bill on a self-ban on issuing consumer loans, which is due to be considered in the first reading on September 26. The Bank of Russia proposed allowing citizens to limit themselves in obtaining a loan last summer (see Kommersant, June 15, 2022), but the bill was submitted to the Duma only in April of this year.

The review by the State Duma Finance Committee notes that the bill provides for excessive detail of the types of loans, loan agreements and methods of obtaining loans, which can confuse a citizen, as a result of which he risks incorrectly filing a self-ban. Also, the actions of a credit institution are not described if, in response to a request from one qualified credit history bureau (KBKI), it received information about the presence of a self-prohibition, and from another – about its absence.

In addition, the bill states that a citizen can apply for self-ban only through the government services portal. “There must be different ways to submit an application, including in person on paper; for this you can use the MFC or mail,” emphasizes Alexey Voylukov, vice-president of the Association of Russian Banks.

Chairman of the National Council of the Financial Market Andrei Emelin draws attention to the fact that the excessive detail of the terms of the ban proposed by the bill will require citizens to have a high level of personal financial literacy and care when choosing options for establishing a ban and will inevitably lead to numerous errors on the part of clients and subsequent disputes. In addition, according to him, the numerous possible options for a ban will create risks of operational errors on the part of credit institutions themselves.

Mr. Emelin believes that such differentiation of the conditions of the ban will require a large amount of operational and financial resources from creditors and operators of state information systems. Deputy Chairman of the Central Bank Expert Council for the Protection of the Rights of Consumers of Financial Services Elman Mehdiyev draws attention to the fact that even credit institutions themselves call the same types of credit products differently for marketing purposes.

Human rights activists also note that the bill describes in too much detail the type of electronic signature. “Here we mean the State Key, which a very small number of citizens have, and it is quite strange to draw it up only for this application,” says Evgenia Lazareva, head of the project of the Popular Front “For Borrowers’ Rights”.

Lawyers point out that the bill involves fighting the consequences, not the problem. According to Sergei Uchitel, partner of the Pen & Paper Bar Association, the first thing that needs to be done is “not self-restraint,” but the fight against leaks and for the safety of citizens’ personal data and maintaining banking secrecy. “It is also necessary to take a closer look at the procedure for issuing loans, especially online, since it is no secret that employees of credit institutions often take part in fraudulent schemes,” he believes.

But the BKI does not agree with the criticism of the bill. Thus, the OKB believes that when there are several sources of the same information, sooner or later there will be cases of discrepancies in information between them, either due to failures or due to differences in data loading speed. “Having a single channel for accepting self-ban applications is a good idea as it ensures uniformity and consequently reduces the risk of technological failures. At the same time, “Government Services” seem to be a more than accessible and familiar channel to which most citizens have access, especially those involved in the lending market,” the OKB explained.

The Scoring Bureau believes that “the implementation of the service itself on the government services portal promises to provide a convenient opportunity to prohibit the receipt of all types of loans, and only if someone wants, will they be able to delve deeper into individual types of loans.”

Maxim Builov, Polina Trifonova